Eye on the Banks
Market Update: 2008-06-26
It is days like today that I am really glad I own gold mining stocks (via GDX and BGEIX) in my portfolio, since gold is up $30 bucks today and gold mining stocks are up 4%. Things are quite interesting today because all the headlines are claiming that the markets are down because of financials. But the big banks are still (knock on wood) hanging on! The question is, are you?
As I write, all three major U.S. stock indexes are down as follows: Dow -271, S&P500 -31 and Nasdaq -67. The BKX banking index is also down to 60.63, but still higher than it was yesterday morning when it hit 60.01. And since 60 is the key level of long term support for the BKX, this means that it is still holding support. The next week or so will be very interesting, as it will be very bad news for the banks and the stock market in general if the BKX breaches 60 and stays below that level for any extended length of time (meaning more than a few weeks).
We are now witnessing a classic battle of the bulls and bears when it comes to the bank stocks. Regional banks are likely to fall further because they are still not down quite as much as the big banks, but the big banks are where my money is going. I am buying KBE, the etf that tracks the BKX banking index. If you are interested, KRE is an eft that is invested in the regional banks, but I do not own it. We will know more about the banking sector's direction later. Until then, Happy Investing.
Gregory
It is days like today that I am really glad I own gold mining stocks (via GDX and BGEIX) in my portfolio, since gold is up $30 bucks today and gold mining stocks are up 4%. Things are quite interesting today because all the headlines are claiming that the markets are down because of financials. But the big banks are still (knock on wood) hanging on! The question is, are you?
As I write, all three major U.S. stock indexes are down as follows: Dow -271, S&P500 -31 and Nasdaq -67. The BKX banking index is also down to 60.63, but still higher than it was yesterday morning when it hit 60.01. And since 60 is the key level of long term support for the BKX, this means that it is still holding support. The next week or so will be very interesting, as it will be very bad news for the banks and the stock market in general if the BKX breaches 60 and stays below that level for any extended length of time (meaning more than a few weeks).
We are now witnessing a classic battle of the bulls and bears when it comes to the bank stocks. Regional banks are likely to fall further because they are still not down quite as much as the big banks, but the big banks are where my money is going. I am buying KBE, the etf that tracks the BKX banking index. If you are interested, KRE is an eft that is invested in the regional banks, but I do not own it. We will know more about the banking sector's direction later. Until then, Happy Investing.
Gregory
the next coupled of weeks are very crucial, with bkx and s&p 500 near critical support levels. if we can hold , we have a tradable rally which could last at least a few months. however, the ultimate low in this bear market may not come until later this year or next. i think what we have seen so far is mainly a reaction to the systemic financial risk we faced with bear stearns and credit derivatives. the credit bubble is now in the process of deflating (i would like to point out that the debt to gdp ratio is now over 340% vs only 270% during the great depression) and the damage to the real economy will unfold in the next year. keep some powder dry for this.
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